The Effect of Uncertainty of Future Benefits from R&D Outlays versus Capital Expenditures

• Main Authors: Hui-Chan Huang, 黃慧展
• Other Authors: Der-Fen Huang
• Format: Others
• Language: zh-TW
• Published: 2007
• Online Access: http://ndltd.ncl.edu.tw/handle/ek2ad3

碩士 === 國立東華大學 === 企業管理學系 === 95 === This paper uses the regression models developing by Kothari, Laguerre and Leone (2002) to compare the uncertainty of future benefits from research and development (R&D) expenditure versus capital expenditure. The standard deviation of future earnings (income before tax) is employed as a proxy for the uncertainty of future benefits. R&D expenditure, capital expenditure and advertising expenditure are explanatory variables, and total assets and financial leverage are as control variables. The main purpose of this study is to provide direct evidence on the relative degree of uncertainty of future earnings attributable to current R&D investments and to current capital expenditure. The empirical findings show that R&D investments generate more uncertain future benefits compared to capital expenditures. It is supported empirically that accounting for R&D expenditure may adopt expense method due to the higher uncertainty of future benefit. Similar results are found from four robustness checks. The result shows, except the traditional industries, R&D investments generate more uncertain future benefits compared to capital expenditures.